The Yen rose broadly on Friday after a fall in quarterly earnings for General Electric stoked fears about the health of the US economy, causing investors to close riskier assets. US stock markets fell more than 2% Friday, dragging the Dollar lower against the low-yielding Japanese Yen and Swiss franc. Analysts said news that General Electric reported a 6% drop in profits, along with data showing US consumer morale plunged to a 26-year low in April, weakened expectation on US economic strength and wealth.
UsdJpy dropped to a session low of 100.65 and was last trading at 100.95, down 0.72%. EurJpy fell 0.38% to 159.61 reversing from an intraday 161.36 high. EurUsd was up 0.35% at 1.5812 after having hit a session high of 1.5855, not far from a record high of 1.5913 hit on Thursday. GbpUsd was little changed -0.12% at 1.9705. UsdChf dropped 0.57% at 1.0011. The Yen also rallied against the NZD and AUD as concerns about the US economy encouraged investors to unwind carry trades, which are funded by borrowing in low-yielding currencies such as the Yen and investing in currencies and assets offering higher returns.
G7 finance ministers and central bankers on Friday said they were concerned about sharp fluctuations in major currencies since their February meeting. G7 comment implied that authorities could step into Dollar intervention, but trader and analysts doubt that would be done any time soon. Besides the FX market reaction to the G7, traders said the Dollar direction would be influence by this week US data including Retail Sales, Producer prices and Consumer prices as well as US banks earnings.
The Federal Reserve is widely expected to lower interest rates from the current 2.25% later in April. In contrast, investors expect the ECB t keep rates at 4% for a while.